ERC sets hearings for new rates in SPUG-served areas

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THE Energy Regulatory Commission (ERC) is set to conduct public hearings on the proposed new rates filed by the National Power Corp. (NPC) for the areas served by its Small Power Utilities Group (SPUG).

The commission will conduct hearings from March to October to seek approval for the proposed new subsidized approved generation rates (SAGRs) for consumers in off-grid areas, the ERC said in a statement on Monday.

The proposed new SAGR rate of P8.5982 per kilowatt-hour (kWh) for residential and P10.0488 per kWh for commercial/industrial will be implemented in Occidental and Oriental Mindoro, Marinduque, Palawan, Catanduanes, Masbate, Romblon, and Tablas, up from the currently effective P7.39 per kWh.

From the current P8.2582 per kWh, new rates of P9.7068 per kWh for residential and P11.0128 per kWh are also proposed to be imposed in Camotes, Siquijor, and Bantayan.

The provinces of Basilan, Sulu, and Tawi-Tawi, currently charged P7.0215 per kWh, are now proposed to pay P8.4465 per kWh for residential and P9.6106 per kWh for commercial/industrial.

Under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), the NPC is mandated to provide power generation and its associated power delivery systems in areas not connected to the transmission lines through SPUG.

ERC Chairperson Monalisa C. Dimalanta said that SAGR for the 14 first-wave areas was approved in 2005, while for the remaining small areas, it was approved in 2011.

“This was adjusted by ERC just for excise tax in 2021,” she said in a Viber message, referring to the hike in excise tax for fuel as prescribed in the Tax Reform for Acceleration and Inclusion Law.

The increase took effect in the first billing period of the year 2022.

“So effectively, the price based on costs collected from off-grid consumers has not been adjusted since 2005/2011, and the deficiency has been made up by the UCME (universal charge for missionary electrification) collected from on-grid consumers,” Ms. Dimalanta said.

EPIRA authorizes the collection of UCME to fund NPC’s operations, including those of its SPUG, which serves remote areas not connected to the grid.

Asked if this could lead to lower UCME charges, she said: “That’s how the rate design works — that is the likely result.”

In an order dated April 29, 2022, the ERC denied the petition filed by the NPC for the adjustment of SAGR, citing the “rise of fuel cost” as one of the reasons.

The ERC, however, directed the NPC to file a new petition for the necessary adjustments, highlighting that “the new petition must result from a proper study and assessment of the existing SAGR of the SPUG areas, taking into ac-count economic development.”

Meanwhile, the proposal of the NPC to have different SAGR for residential and commercial/industrial consumers is “essentially due to inherent differences between these types of customers.”

“Petitioner NPC proposes to adopt a different rate for residential and commercial/industrial customers due to the stark difference in the nature, usage, and consumption of power between these classes of customers,” the ERC said in an order on Jan. 18. — Sheldeen Joy Talavera